Headlines often highlight FinTech disruptors and AI. But the deepest changes in banking are happening behind the scenes. Based on reports from KPMG, the Financial Stability Board, and other market experts, here are five trends that will define the future of financial services.
1. Higher Costs, Worse Experience
The great paradox: whilst internal costs for serving customers rise, satisfaction plummets. KPMG reports that 64% of businesses witnessed falling customer experience scores, particularly in “empathy” (down 6% since 2022).
As Sara Forbes from KPMG UK explains: “The trends are showing cost to serve customers is going up, but perceived value to customers is going down and the gap therefore widening.”
The problem: Banks are deflecting customers to low-cost digital channels that prove to be “poor substitutes for human interaction,” frustrating users whilst system costs continue climbing.
Key to success: Redesign digital channels to deliver genuine value, not merely deflect costs
2. The Biggest Risks Are Outside the Banks
The Bank of Spain warns of a new category: “systemic providers.” Banks now depend heavily on a handful of tech giants for critical services: cloud computing, data processing, IT infrastructure.
“In the near future we may be talking about systemic providers, rather than systemic banks,” observes the Bank of Spain.
The reality: A single server failure at a tech provider could trigger a financial crisis. The epicentre of systemic risk has shifted from the City to Silicon Valley.
Imperative: Risk management must extend beyond banks to critical technology providers
3. Culture Beats Cost-Cutting
Slashing budgets no longer works. A KPMG survey found 82% of banking leaders cite “deep cultural challenges” as the primary obstacle to sustainable cost reductions.
The most forward-thinking banks are adopting a “cost-culture mindset” inspired by Japanese manufacturing, using systems like Hoshin Kanri to align the entire organisation around 3-5 clear strategic objectives.
The NASA lesson: During JFK’s 1962 visit, when he asked a janitor what he was doing, the man replied: “Well, Mr President, I’m helping to put a man on the moon.”
Mindset shift: The question isn’t ‘What can we cut?’ but ‘What are we building, and is every pound aligned with that mission?’
4. AI Isn’t Replacing Bankers, It’s Replacing Paperwork
Contrary to popular fears, AI doesn’t replace jobs; it replaces tasks. As Agustín Rubini from Gartner puts it: “AI doesn’t replace jobs, AI replaces tasks.”
Real-world applications:
- Front-office: Automating routine data entry
- Expense Management: Account reconciliation and invoice processing
- Customer service: Chatbots for common queries
- Security: Advanced fraud detection
Objective: Free up human time for value creation, not data entry
5. The Blind Spot: Lack of Spend Visibility
Even banks with £60 billion+ revenues operate with shocking lack of visibility over their own internal spending. A GEP SMART case study revealed that a major US bank had visibility of only 40% of its invoice data before implementing a unified procurement platform.
“Spend visibility” refers to an organisation’s ability to see, understand, and control what it purchases and from whom. It’s fundamental for:
- Effective cost control
- Greater negotiating power with suppliers
- Regulatory compliance
The vicious cycle: Without spend visibility, banks cannot diagnose their own expenditure, leading to inefficient investments in digital channels that frustrate customers.
Strategic challenge: Before adopting more technology, master the basics, know where every pound goes.
The future of banking isn’t just about flashy apps or AI headlines. It’s about managing costs, tech dependencies, and internal data with clarity. Each bank must ask itself:
